Egypt has increased the price of subsidized bread by 300%, the first such increase in over three decades, as the government moves towards a cash subsidy system. The cost of a subsidized loaf will rise to EGP 0.20 from up from EGP 0.05 starting 1 June, Prime Minister Mostafa Madbouly announced on Wednesday.
The move comes as Egypt grapples with the rising cost of wheat, a staple food for its population of over 70 million. The country is the world’s largest wheat importer and provides subsidized bread to a large portion of its citizens.
“The cost of a loaf of bread to the government is 125 piasters,” Madbouly said during the press conference, highlighting the financial strain of the subsidy program. He further confirmed that Egypt will transition to cash subsidies instead of in-kind subsidies starting in the fiscal year (FY) 2025/26.
Ali Moselhi, the Minister of Supply, revealed that the country consumes 8.5 million tons of wheat annually and that the transition to conditional cash subsidies will not be fixed.
The decision to raise bread prices is a sensitive one in Egypt, where bread is a staple food and a symbol of social stability. A previous attempt to reduce bread subsidies in 1977 led to deadly riots. However, the government has been gradually reducing subsidies on various essential goods and services to address economic challenges.
Currently, Egypt distributes 150 loaves of subsidized bread per person per month through a smart card system implemented in April 2014. The budget for bread and subsidized goods in Egypt’s budget for the next fiscal year has increased by about 5% to EGP 134.2bn.
“The cost of five loaves of bread is EGP 1, which means they are essentially free, while the actual production cost is EGP 6,” Moselhi said. He also noted that some citizens misuse subsidized bread for animal feed.
After the price increase, each individual will be entitled to five subsidized loaves per day for EGP 1, instead of 25 piasters. The Minister of Supply assured that bakeries are operating at full capacity and receiving their daily quota of flour.
Attia Hammad, the Vice President of the Federation of Egyptian Chambers of Commerce (FEDCOC), emphasized that the decision to raise bread prices is a sovereign government decision and that bakeries will implement the government’s directives to ensure the success of the subsidized bread system.
